U.S. IRS struggles to track its 'Obamacare' spending: watchdog

Get Covered America buttons are seen during a training session in Chicago, Illinois September 7, 2013 before volunteers canvas a Chicago neighborhood to talk with residents about the Affordable Care Act - also known as Obamacare. REUTERS/John Gress

WASHINGTON (Reuters) - The U.S. Internal Revenue Service needs to do a better job tracking its spending related to President Barack Obama's new healthcare law, an IRS watchdog said on Wednesday.

With Congress debating whether to take funding away from the Affordable Care Act, or Obamacare, the Treasury Inspector General for Tax Administration said in an audit that the IRS failed to account for some of the agency's spending to implement the law.

Federal agencies must report their spending so there is an accurate measure of the full cost of government programs.

The IRS did not report $67 million in costs the agency incurred for employees who were working on the healthcare law for fiscal 2010 through 2012, the report said.

The money was part of $488 million the IRS tapped from a special fund the agency was using to implement Obamacare.

TIGTA's report recommended the IRS improve its record-keeping. IRS said in response that it agreed with TIGTA's recommendations and had already put fixes in place.

Enacted in March 2010, the healthcare law made many tax code changes, including requiring the IRS to verify that most people have health insurance in 2014. It must also disperse new tax credits meant to help people meet their insurance costs.

The IRS expects to spend $360 million on Obamacare implementation in fiscal 2013, which ends September 30, TIGTA said.

Unless Congress gives the IRS more money for the healthcare law, the agency will have to dip into its operating budget, already cut by Congress, TIGTA said.

Republicans in the House of Representatives have proposed cutting the IRS budget by 24 percent in fiscal 2014 and have voted repeatedly to defund Obamacare.

The Obama administration's fiscal 2014 budget requested $440 million for the IRS to administer the law's tax provisions.